Building Winning Organisations in China
How are foreign companies in China adjusting their organisations to new times? We asked two business leaders to share their experience with us. They come from sectors where transformation is strongly underway: retail and industrial solutions.
The Journey to Omni-Channel
With retail sales of EUR 11.6b and over 5,500 affiliated stores in 45 countries, Switzerland-based INTERSPORT is a leading sports retailer. In China, the company is riding the country’s sports and fitness wave, with 23 stores across 7 provinces. Robin Trebbe, MD China & Asia Pacific, shared the organisational transformations that lie behind their winning strategy in the region.
How has INTERSPORT’s China strategy changed in the last few years?
Just offering good products is not enough anymore. The Chinese market has developed rapidly: consumers have a deeper product knowledge and are more demanding than before, and e-commerce and electronic payment have become the norm.
So we have adopted an omni-channel approach, constantly enhancing our online presence and in-store experience. Around 50% of our revenue in China already comes from online sales, and soon we will open our first physical “future store” in Beijing, which we have built together with Alibaba to incorporate VR and other exciting interactive features.
Have you expanded or re-structured to pursue this new strategy?
Yes. Our regional head office was previously in Hong Kong. Seeing the growth and potential of the Chinese sports market, we decided to relocate to Shanghai and build a complete HQ here with all functions – from product development to retail and marketing. We created a digital team fully dedicated to driving e-commerce and online marketing.
What HR challenges have you faced?
Finding and keeping qualified people remains difficult. Rotation tends to be highest among store staff, who are crucial in our business – if a customer is looking for the right ski outfit, you need people with product knowledge in stores to assist them. The market for e-commerce talents is also tough because you’re competing against China’s booming tech firms. In our industry, the growth of Nike, Adidas, and other large global sports brands, poses an additional talent challenge.
How do you manage these problems?
We focus on developing our internal talent pool, whereas in China the traditional approach is to recruit from outside. Previously, it was common for store staff to be completely renewed after one year. Now they stay 1.5-2 years, which we’ve achieved through a store management team that focuses on people development. Being an international employer with an inclusive company culture also helps. New joiners are motivated by the exposure they get through global meetings, and the chance to gain experience in our Europe HQ or other global offices.
From Volume to Quality Growth
Production in China is increasingly tech and quality focused. This is driving demand for advanced industrial solutions such as those offered by Ziemann Holvrieka – a leading provider of tanks, engineering services, and process technology for breweries and other beverage and liquid food industries. Christian Blatt, GM Asia, talked to us about the organisational factors behind their success in China, where the company now has the world’s largest factory for producing stainless steel tanks.
Has Ziemann Holvrieka’s China strategy changed in recent years?
Our China organisation has developed its focus from volume growth towards quality growth. A major part of our strategy now is to differentiate ourselves by offering more diversified services, which we can achieve thanks to our growing market know-how. Sustainability concerns have also become a major driver for new business areas.
How has the company developed its China organisation to pursue this new strategy?
When it comes to processes, production, engineering, and service, our sister companies in Europe provide continuous know-how transfer to upgrade our capacities in China. At the same time, the China team drives improvements by (1) working closely with customers to understand their specific needs, (2) monitoring the activities of the competition, and (3) continuously improving the cost and quality of our products and services. The management in China is also fully responsible for recruiting and developing talent, which has been key in the organisation’s success.
Is the mix of local/expat talent changing?
We believe in the sentence: think global, act local. Activities for the Chinese market are mostly managed by local talent, whereas export oriented activities involve more expats.
What HR difficulties have you faced?
The main challenge is finding technically and commercially skilled sales people. Our sales team requires very specific know-how on production and application processes in order to provide valuable solutions to customers. The “war” over this hard-to-find talent is severe, so costs are significant.
How do you manage this problem?
- Comprehensive training: Besides functional capabilities, our training activities focus on personal efficiency (communication and self-management), culture (cultural awareness and compliance), and leadership (result orientation and change management).
- Strategic partners: We have had a positive experience in our cooperation with Fiducia’s Executive Search Team, who helped us scan the market to identify matching candidates with the right motivation (no job hoppers!).
- High-trust relationships: Organisations in China are harmony driven – trust is a major factor. We have learned from experience that, once on board, high performing employees expect a high-trust relationship with leaders, and reward this trust with personal loyalty.
- Personal approach: Employees in China don’t differentiate between personal and professional as much as Europeans. Understanding their personal needs is key for retention. As an example, young people in China must normally own an apartment as a precondition for marriage. So we take this into consideration in the salary levels of employees we recruit from other cities, to ensure that they can settle down in Nantong, where our China HQ is based.
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